Wednesday, March 05, 2008

Q: My mother just went into an assisted living facility due to Alzheimer's. It costs over $4500 per month. Are any portion of these expenses tax deductible?

Answer from AICPA member Kenneth J. Strauss: Sorry about your mother but the good news is that the entire $4,500 is fully tax deductible as a medical expense.

The rules can get pretty complicated but it is clear that Alzheimer's disease is a severe cognitive impairment which is the threshold for determining if the taxpayer is entitled to a full medical deduction.

Like all medical deductions the total amount of medical deductions is an itemized deduction. The medical expenses in excess of 7.5% of her adjusted gross income are deductible.

Depending on how high her income is will determine the full tax benefit. This might be a year to take some extra money from her retirement account. If your mother does not have the resources and you or another family member is paying then you should see if your mom can qualify as a dependent.